Wednesday, March 24, 2010

Update on The Ultimate Momentum Signal - 25th March, 2010

 The Breakout - Day 16

 Cautiously Optimistic Settlement Ahead...?
On Tuesday, the Nifty futures opened higher than the previous close and closed at 5225 gaining 20 points. Tuesday's range was confined to the previous day and therefore, it qualified as an inside day.
Inside days indicate indecision. Meanwhile, the US markets closed at an eighteen month high on Tuesday. The US VIX index ( volatility index ) also closed at a new low.  Today, most Asian markets closed in the positive territory. At the time of writing this edition, ( 8.30 PM, IST, 24the March, 2010 ) most of the European and the US markets were trading with insignificant losses because of the new worries on the debt problems of Greece and a debt downgrade of Portugal. However, all major world equity indices are showing either positive or neutral momentum.  

Nifty Future - Daily Chart  

The intraday trailing stop remains at 5170 for the Nifty futures. The Put Call Ratio for the March expiry stood at a high of 2.1 on Tuesday. If the international markets were to trade sideways till the end of the first quarter, our market may also trade sideways because of the so called end of the quarter support by institutions. The resistance for the Nifty future stands at 5290 and 5305. 

The Updated Momentum Signal Spreadsheet 

The updated spreadsheet showing the Momentum Signal as on the close of   23rd March 2010, is given below.
The value of the Ultimate Momentum Signal has remained in the bullish territory for the sixteenth day after triggering a buy signal on the budget day, the 26th of February.

 Projected Momentum Signal Close Values

The projected levels of closing values required for momentum shift / neutrality / continuation as on the close  of trading  on 25th March 2010 are given in the table below. The table also include the projected closing values of BSE Sensex required for momentum shift / neutrality / continuation.

  You can click on the table to enlarge. For more info on the above table,  please click here.

Please note that the minimum closing values required for keeping the Momentum Signal in the buy mode ( i.e. above +50 ) has gone up considerably to 5257 and 5245 for the future and the underlying index respectively and these values are approximately 20 points higher than the previous closing. Therefore, the chances of the trading system indicating an exit of long positions are real. All traders are advised to be cautious in the market because of the chances of scrip specific wild gyrations due to the derivative expiry.

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